Bitcoin Tumbles, Wipes Out All of its Gains

Bitcoin (BTC) on MtGox finds itself right back in the same position experienced during its lows 5 days ago, losing

Bitcoin (BTC) on MtGox finds itself right back in the same position experienced during its lows 5 days ago, losing 10% since establishing its latest peak. Virtually all losses occurred over the past 24 hours. BTC is now trading at around $930 on MtGox. In an effort to find a bottom, BTC traded as low as $912- its lowest level in 4 days- before settling around the current price.

BTC had previously been showing signs of readiness to advance, knocking on the $980 door but turned away repeatedly. Yesterday, BTC finally managed to break this barrier, after which it advanced easily by over 5% in the absence of additional roadblocks. However, signs of weakness surfaced when BTC straddled the $1000 level for prolonged periods without showing determined steps to move up to the next level. It gradually slipped back to slightly above the broken resistance level before losing the rest of its footing.

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BTC/USD, MtGox, Jan 28
BTC/USD, MtGox, Jan 28

In the process of decline, volume was not as heavily concentrated as during its ascent, maxing out at 1400 BTC per hour and spread relatively evenly over the period.

BTC is once again trading in line with its 15-day moving average.

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BTC dropped to around the $770 level on both BTC-e and Bitstamp, though the magnitude of its original ascent was more muted on those exchanges.

With its decent, the price gap between MtGox and its peers has narrowed somewhat to about $160-$170, as the scale of decline was lower outside MtGox. The gap had widened to over $200 at its climax. There is speculation that the withdrawal of funds from MtGox has been recently taken longer and greater difficulty than previously, thereby further increasing the effective premium traders are willing to pay for BTC.

The decline may have been fuelled by fears as to the cryptocurrency’s future viability, following the arrests of Charlie Shrem and Robert Faiella on charges of money laundering. In addition, Russia’s stern warning against using the cryptocurrency undermines its entire use in potentially one of its biggest markets and raises the possibility of over governments following suit.

 

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